Case Number: ITA 420/DEL/2019
Appellant: Sandeep Bhargava, New Delhi
Respondent: ACIT, Circle-60(1), New Delhi
Assessment Year: 2015-16
Case Filed On: 2019-01-21
Order Type: Final Tribunal Order
Date of Order: 2019-08-20
Pronounced On: 2019-08-20
Sandeep Bhargava, a resident of New Delhi, filed an appeal against the order dated 30/11/2018 of the Learned Commissioner of Income Tax (Appeals) -19, New Delhi [“Ld. CIT(A)”], for the assessment year 2015-16. The primary issue in the appeal was the addition of Rs.58,89,195/- on account of long-term capital gains, which was claimed as exempt under Section 10(38) of the Income Tax Act, 1961, and an additional Rs.1,76,675/- as commission paid.
The case was heard by the Delhi Bench “G” of the Income Tax Appellate Tribunal (ITAT), presided over by Shri O.P. Kant, Accountant Member, and Shri K.N. Chary, Judicial Member. The appellant was represented by S/shri B.L. Mittal and Ankur Mittal, while the respondent was represented by Shri N.K. Bansal, Senior Departmental Representative (Sr. DR).
The appellant’s grounds of appeal included several key points:
During the hearing, the appellant submitted documentary evidence, including purchase and sale invoices, dematerialization requests, and bank statements, to support the claim of genuine long-term capital gains. The appellant argued that the shares were purchased in physical form, later dematerialized, and sold through a registered broker on the Bombay Stock Exchange, with Security Transaction Tax (STT) duly paid.
However, the Assessing Officer (AO) and the Ld. CIT(A) found the transactions suspicious due to the sharp rise in the price of the shares, which was not commensurate with the financial performance of the company, “HPC Bioscience Ltd.” The AO referred to an investigation by the Directorate of Income Tax (Investigation), Kolkata, which revealed that the share price was manipulated by a group of brokers, directors of the company, entry operators, and shell companies to generate bogus long-term capital gains.
The Tribunal noted several key observations:
Based on these observations, the Tribunal concluded that the transactions were not genuine and upheld the addition made by the AO. The Tribunal relied on the principle of human probabilities and the improbability of such a sharp rise in share prices given the company’s weak financials.
In conclusion, the appeal filed by Sandeep Bhargava was dismissed. The Tribunal upheld the addition of Rs.58,89,195/- as unexplained long-term capital gains and Rs.1,76,675/- as commission. The decision was based on the evidence of market manipulation and the failure of the appellant to prove the genuineness of the transactions.
The order was pronounced in the open court on 20th August, 2019, by the members of the Tribunal:
For more information on similar cases and legal precedents, visit the official website of the Income Tax Appellate Tribunal of India.
Sandeep Bhargava vs ACIT: Dispute Over Long-Term Capital Gains – ITA 420/DEL/2019
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